In Maryland, an employer must carry workers’ compensation insurance. The employer is able to self-insure or obtain insurance through a private or public company, such as the Injured Workers’ Insurance Fund. If, however, an employer does not carry workers’ compensation insurance, that does not mean that an injured employee will not be able to recover for their work-related injury.
The Uninsured Employers’ Fund was established in order to ensure that injured employees would be able to recover for work-related injuries even though the employer was non-compliant with Maryland law.
What Does this Mean for the Injured Worker?
The injured worker will file a workers’ compensation claim regardless of whether the employer is insured. The injured worker may have to take an extra step to get the compensation, but the worker will get the compensation they deserve. The injured worker is not punished for the employer’s failure to follow the law.
Uninsured Employer’s Rights & Obligations
Once the injured worker files a claim with the Commission, and the Commission determines that the employer is not insured, the Commission will send the employer a copy of the claim form, an uninsured employer’s questionnaire, and a request for verification of the employer’s workers’ compensation insurance policy. Within 21 days after the notification is mailed, the employer will file either the uninsured employer’s questionnaire or verification of the employer’s workers’ compensation insurance policy and issues, if the employer contests the claim.
If the uninsured employer files issues contesting the claim, the Commission will set a hearing to review the claim. Following the hearing, the Commission will either dismiss the claim or issue an award requiring that the appropriate compensation be paid by the uninsured employer to the claimant.
If the uninsured employer does not contest the claim, without a hearing, the Commission will dismiss the claim or issue an award requiring that the appropriate compensation be paid by the uninsured employer to the claimant.
Uninsured Employer’s Duty to Pay
If the employer is uninsured, the employer must pay the injured worker benefits as awarded by the Commission. Being uninsured does not relieve the employer of its obligation to the injured worker. The employer will be given the opportunity to pay benefits to the injured worker before the Uninsured Employers’ Fund becomes involved in the matter.
When the Commission issues an award of compensation, the Commission will mail the claimant a copy of the award, a non-compliance form, and a claimant’s questionnaire. If the uninsured employer fails to pay the claimant, the claimant must complete the non-compliance form and the claimant’s questionnaire and return it to the Commission. The claimant must wait and give the uninsured employer 30 days to pay before filing these forms.
If the claimant fails to file these forms, no action will be taken against the uninsured employer or the Uninsured Employers’ Fund.
Uninsured Employer in Default
If an injured worker files a workers’ compensation claim, an employer who fails to pay benefits due to that injured worker is in default. The employer will be in default if the employer fails to (1) secure payment of compensation by maintaining insurance with an authorized insurer, (2) deposit security sufficient to cover a claim by a covered employee that is at least $100,000 (unless the employer is self-insured), and (3) pay compensation in accordance with the Commission’s award within 30 days after the date of the award.
If an employer is in default, after the 30 days after the date of the award has passed, the Commission will notify the employer that (1) the employer is in default, and (2) the license or permit of the employer to do business in Maryland may be suspended. Once the employer receives the notice of default, the employer must pay the award, or notify the Commission of any objections they may have to the issuance of the award. If the employer fails to pay the award, the Claimant may then apply for payment from the Uninsured Employers’ Fund.
Role of the Uninsured Employers’ Fund
If the Commission receives proof of non-compliance, the claimant’s questionnaire and a request for payment from the Fund, the Commission will send written notification to Fund. This notification includes (1) commission’s award, (2) completed noncompliance form, (3) completed claimant’s questionnaire, (4) request by claimant for payment by the Fund, (5) completed uninsured employer’s questionnaire, if it was completed and returned, and (6) the claimant’s initial claim.
Within 21 days after the notice is sent to the Fund, the Fund will respond by either paying the award or disputing the award by filing issues.
If the Fund disputes the claim, the Commission will hold a hearing to review the claims of all parties involved. After the hearing, the Commission will either dismiss the claim or issues an award requiring that the appropriate compensation be paid to the claimant.
Suspension of the Employer’s License or Permit to Conduct Business in Maryland
The uninsured employer will be notified that the license or permit of the employer to conduct business in Maryland may be suspended if the employer fails to reimburse the Fund for payment of an award or pay any necessary assessments. This notice will also be sent to any licensing unit who issued the employer’s license or permit. The uninsured employer has the right to a hearing within 15 days after receipt of this notice before the licensing unit. Following the hearing, the licensing unit will suspend the license or permit of the uninsured employer if it finds that the employer has failed to reimburse the Fund or pay the assessments ordered by the Commission. The suspension will continue until the uninsured employer makes the above-payments, or reaches an agreement regarding making the above-payments.
Assessments or Fines Against the Uninsured Employer
If the Commission issues a decision for compensation against the uninsured employer, the Commission will impose against the uninsured employer an assessment of (1) at least $500 but not exceeding $1,000, and (2) 15% of any award made in the claim, not exceeding $5,000 in any one claim. All of these payments are made in addition to any payments made to the Claimant. Any assessments that the Commission orders to be paid by the uninsured employer will be paid to the Uninsured Employers’ Fund.
If the Fund makes a payment to the Claimant as directed by the Commission, the Fund is subrogated to the rights of the Claimant against the uninsured employer. This means that if the Claimant were to recover any compensation from the employer, the Fund has a “claim” to that compensation. This is to insure that the Claimant is not receiving the same award twice for the same injury. If the employee does not actively pursue a claim against the employer, the Fund may institute a civil action against the employer to recover the money paid under the award or refer the matter to the appropriate authorities for prosecution, or do both.
The Fund is subrogated to the rights of the uninsured employer as well. What this means is that if the Fund and the uninsured employer both pay compensation to a covered employee, the Fund will apply any money that they may receive from a third party first to the repayment of the award paid by the Fund, second, to any unsatisfied demand for security and to assessments imposed against the uninsured employer, and, finally, to the uninsured employer. This situation may arise if the Claimant is involved in a car accident while at work that was caused by a third party. The third party can be sued in tort law, and the Claimant will recover under workers’ compensation law, but not both. Any compensation that is recovered under tort law will go towards paying back the Fund or uninsured employer who paid compensation to the Claimant. The idea is that a Claimant cannot recover twice for the same injury. If the amount of money that is received from the third party is in excess of the award of compensation, the Fund will apportion the excess amount between the covered employee and the Fund, and use the balance to pay the Fund’s expenses, repay any award paid by the Fund, satisfy any unsatisfied debt for security or assessments imposed against the uninsured employer, and, if there is anything left over, return the remainder to the uninsured employer.
All Employers/Insurers Pay into the Uninsured Employers’ Fund
So, how does the Uninsured Employers’ Fund have the money to pay these kinds of awards? The Commission imposes against any employer or insurer an assessment equal to 1% of each award for permanent disability or death, even if the case is settled without the need for an order from the Commission. This assessment is not deducted from the Claimant’s award, but an extra “fee” that must be paid by the employer/insurer to the Uninsured Employers’ Fund. Once the assets of the Fund reach $5,000,000, the assessments will be suspended and will not resume until the Fund’s assets drop below $3,000,000.